What Happens When Church and State Get Mixed

By Joseph Cotto

These days, no shortage of Americans want Uncle Sam to play a larger role in regulating financial institutions. Some folks would even like to see the nationalization of large banks.

In another corner, more than a few people like the idea of church and state no longer being quite so separate as the Constitution demands. Needless to mention, most of said people want some variant of Christianity to be the state religion.

No doubt that some especially — shall we say — 'interesting' characters yearn for a combination of the two.

While many a sage political scientist, economist, or philosopher can provide cautionary tale after cautionary tale as to why these are bad ideas, nothing explains like firsthand experience.

Enter the story of Ettore Gotti Tedeschi, former chairman of the Institute for the Works of Religion (IWR), more well known as the 'Vatican Bank'.

In March of 2012, our State Department placed the Vatican on an official list of countries where money laundering is a dire concern. Not long after, as — among U.S. news agencies — it seems only Reuters covered in detail, Tedeschi was unanimously ousted by the IWR's board of directors. One should note that in 2010, the IWR had roughly $33 million of its assets frozen by Italian authorities due to suspected criminality.

Under Tedeschi's leadership, which began in 2009, the IWR adopted new policies geared toward ethical business practices. His term also saw a serious effort to comply with international financial standards, something that entailed groundbreaking rules for in-house bankers.

These reforms proved anything but popular with the Vatican hierarchy, however.

A few months before Tedeschi was sacked, Italian media outlets reported that there was serious conflict within the Vatican's upper echelon regarding how much transparency is really needed. These reports were supported by sensitive letters revealing attempts to minimize the amount of data released about bank practices before the reforms could be implemented.

Tedeschi told Reuters that it was his honesty which caused him to be fired, and that he had "paid for [his] transparency."

Of course, the Vatican had a decidedly different perspective.

It issued a statement that accused Tedeschi of not sufficiently tending to the "various fundamentally important functions of his office" and announced a fresh search for someone capable of "re-establish(ing) full and effective relations between the Institute and the financial community, based on mutual respect of internationally accepted banking standards."

Sounds like exactly what Tedeschi was trying to do. Could it be that the anti-reformist faction of the Vatican business sector has won this round?

Could it be any more obvious?

This is a truly unfortunate story; the sort where the good guy — the fellow with all the odds stacked against him — is quashed by a powerful, and near-certainly criminal, establishment.

Despite this, it stands as a lesson in what happens when church and state are mixed into a sour batter of theocracy. After all, if individuals believe that they are operating with the power and guidance of the divine, then what do the laws of mere mortals matter?

Not too much, apparently.

Then again, how many Vatican bankers truly believe in the God of Abraham, let alone doctrines of their professed Roman Catholicism? For these crypto-secular hypocrites, much is held in common with Americans that want a central government to control all banking that takes place in our country.

Events like the Vatican's continuous money laundering scandal, and the subsequent silencing of those trying to rectify it, are exactly what we get when big religion and big money align to form a big government.

Thank the Founding Fathers that our country was built on nonsectarian, capitalistic Enlightenment principles. Nothing else would do for the Land of the Free and Home of the Brave.